Insulators define interactions between transcriptional control elements in eukaryotic genomes. The gypsy insulator found in the gypsy retrovirus binds the zinc-finger Suppressor of Hairy-wing [Su(Hw)] protein that associates with hundreds of non-gypsy regions throughout the Drosophila genome. Models of insulator function predict that the gypsy insulator forms chromatin loop domains through interactions with endogenous Su(Hw) insulators (SIs) to limit the action of transcriptional control elements. Here we study SI 62D and show that interactions occur between two SI 62D elements, but not between SI 62D and the gypsy insulator, limiting the scope of genomic gypsy insulator interactions. Enhancer blocking by SI 62D requires fewer Su(Hw)-binding sites than needed for gypsy insulator function, with these target regions having distinct zinc-finger requirements for in vivo Su(Hw) association. These observations led to an investigation of the role of the Su(Hw) zinc-finger domain in insulator function. Using a combination of in vitro and in vivo studies, we find that this domain makes sequence-dependent and -independent contributions to in vivo chromosome association, but is not essential for enhancer or silencer blocking. These studies extend our understanding of the properties of Su(Hw) and the endogenous genomic regions to which this protein localizes.